THE WANDERING TAX PRO

Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.

Wednesday, February 25, 2015

I have completed and mailed out 63
returns – which is not bad for the first third of the season.I don’t remember if I saved my last year’s
daily log – and if I did I don’t know where to put my hands on it easily – but I
think I am, if not at the same point, a bit ahead of last season at this time.

I have either done, received in the
mail, or made arrangements with 49% of the names on my mailing list – which I
am sure is ahead of last year.

The “to be done” box is not “chock-a-block”
yet.And there are only a few “red
files” (need more information), and they are completed as soon as the missing
information arrives.

I have yet to do a return where I
did not check the “full-year coverage” box, although there may be one in the
red files.And I have not done any
returns, other than my own, that involved a Form 1095-A.I received one, and was about to start it,
when the client emailed to tell me his 1095-A was one of the 800,000 FUs.

We were told this was going to be one
of, if not the, worst tax filing seasons ever – but it is actually been one of
my better ones so far (as far as smoothness of operations).

I do not accept any new 1040
clients.But if I did I would most
definitely not accept any new
clients who would be applying for the Earned Income Credit or who did not have “full-year
coverage”.

Let us hope I continue to be productive,
and things continue to run smoothly, so that I can give a similar positive “where
the fakawi” at the half-way mark.

Saturday, February 21, 2015

“About 20 percent of the tax filers who had
Federally-facilitated Marketplace coverage in 2014 and used tax credits to
lower their premium cost —about 800,000 (< 1% of total tax filers) —will
soon receive an updated Form 1095-A because the original version they were
issued listed an incorrect benchmark plan premium amount.”

And
-

“We are advising them to wait until the first
week of March when they receive their new form or go online for correct
information before filing. For those who have filed their taxes—approximately
50,000 (< 0.05% of total tax filers) —the Treasury Department will provide
additional information soon.”

It
seems this FU “only affects people who
signed up through one of the 37 states using HealthCare.gov” and “taxpayers whose forms were affected will
receive a phone call about the problem from the Marketplace by early March, in
addition to letters and emails with additional information about the status of
their forms.”

To
find out if you received a FU-ed Form 1095-A you can check your account at www.HealthCare.gov.

So far I have only had one client with a Form 1095-A - and he was told his Form 1095-A was FU-ed, so we have to wait to file his return. I had been hoping to complete his 1040 this week-end. When I first reviewed his 1095-A something seemed amiss - because even though his actually income was more than that estimated when applying it looked like he was due an additional credit.

FYI - I have only had one client so far who did not have "full-year coverage" for all members of his household (currently "red-filed" - need more info).

Monday, February 2, 2015

Now it is time for what you have been waiting a year for - the annual first business day of February tradition here at THE WANDERING TAX PRO of posting “The Twelve Days of Tax Season” -

On the first day of tax season my client gave to me a Closing Statement for the purchase of a home.

On the second day of tax season my client gave to me 2 W-2 forms.

On the third day of tax season my client gave to me 3 mortgage statements.

On the fourth day of tax season my client gave to me 4 Salvation Army receipts.

On the fifth day of tax season my client gave to me 5 Form K-1s.

On the sixth day of tax season my client gave to me 6 1099s for dividends.

On the seventh day of tax season my client gave to me 7 cancelled checks.

On the eighth day of tax season my client gave to me 8 useless items.

On the ninth day of tax season my client gave to me 9 medical bills.

On the tenth day of tax season my client gave to me 10 stock sale confirms.

On the eleventh day of tax season my client gave to me 11 employee business expenses. On the twelfth day of tax season my client got from me a finished tax return, 11 employee business expenses, 10 stock sale confirms, 9 medical bills, 8 useless items, 7 cancelled checks, 6 1099s for dividends, 5 Form K-1s, 4 Salvation Army receipts, 3 mortgage statements, 2 W-2 forms, and a Closing Statement for the purchase of a home.

And, of course, on the thirteenth day of tax season the client gave to me a corrected Consolidated 1099 from Wells Fargo Advisors!

“And I do not have
to verify that a client has health insurance coverage. I simply ask the
client and he or she tells me yes or no.

If they tell me yes I do not need to do anything more.
Unless I have independent personal knowledge or information to the
contrary I assume he or she has told me the truth. To repeat I do not need to “verify” via independent documentation that the
client does, in fact, actually have coverage.”

And-

“In most cases I will know if a client had
full-year insurance coverage without even asking the question – based on the
forms, returns and information he normally gives me every year.”

* My post on an interesting,
and unintended, way New Jersey screws retired residents is included in this
weeks “In the Blogs” installment at ACCOUNTING TODAY titled “If You’ve Told Them Once …”.

“While established tax preparers will be
putting their tax software into overdrive this season, we’d like to take this
opportunity to talk about the importance of NOT using tax software as a student
learning to prepare taxes.”

Great minds do
think alike.I have always said that the
best way to learn how to prepare tax returns is to prepare tax returns – and by
hand.

Wednesday, January 28, 2015

In
the course of researching my MainStreet.com Tax Tips on how Obamacare affects 2014
tax returns (which will be published in early February), and preparing my first
1040 involving the Premium Tax Credit, I have come across the following items
of interest -

(1)The Modified Adjusted Gross Income (MAGI) used
to determine the individual shared responsibility penalty and calculate the
Premium Tax Credit begins with Adjusted Gross Income and adds excluded foreign
income from Form 2555 or 2555-EZ and tax-exempt income report on Line 8b of the
1040 or 1040A.However when calculating
the Premium Tax Credit you must also add any nontaxable Social Security
benefits (including tier 1 Railroad Retirement benefits).

(2)Because the calculation of the individual
shared responsibility penalty and the Premium Tax Credit begins with AGI, you
can reduce the penalty or increase the credit by making, or increasing, a
deductible IRA or self-employed retirement plan contribution.

(3)The IRS does not have the power to enforce
the collection of the individual shared responsibility penalty.There is no enforcement mechanism for
collecting the individual shared responsibility penalty other than reducing a
taxpayer’s current and future refunds.The Affordable Care Act does not permit the IRS to levy or attach a lien
to wages, bank accounts or personal assets to collect the penalty, and no
criminal prosecution or penalty may be imposed on anyone for refusing to pay
the penalty.

(4) The IRS has announced some penalty relief for returns that include a payback of excess advance premium credits. Trish McIntire goes into detail in her post "Premium Tax Credit Penalties" at OUR TAXING TIMES.

Before contacting me with questions about how a blog post relates to your specific situation, please be aware that I do not give free tax advice to non-clients by e-mail, comment response, or phone. So don't waste your time and mine.